—— Disney invests $1.5 billion in Epic Games; McKinsey could fire 3,000 staffers; Initial jobless claims fall; Manhattan rent keeps rising; Ralph Lauren jumps to 9-year high; Chinese VC firm to invest $1 billion in Middle East; US mortgage rate ticks up.

1. Disney invests $1.5 billion in Epic Games

Today, Walt Disney announced to have invested $1.5 billion in Epic Games, the maker of the popular game Fortnite.

Disney owns a legendary IP portfolio that includes Star Wars, Marvel, and Avatar. Fortnite plans to feature Disney characters and elements in the game. Both sides could co-produce contents and even bring new attractions to Disneyland.

Disney CEO Bob Iger says this investment marks the first time Disney enters into the world of gaming, and the future is full of possibilities.

Disney gave up on producing games in-house and tapped EA and Sony to build gaming contents.

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Source: Bloomberg – Disney to Invest $1.5 Billion in Fortnite Maker Epic Games

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2. McKinsey could fire 3,000 staffers

According to people with knowledge, McKinsey issued “concerns” ratings to over 3,000 staffers in the recent months.

People who have received the rating have 3 months to show significant improvement, or the company could consult them to leave.

Today, McKinsey employes over 45,000 people globally, around 60% more than 2018. The ratio of employees that receive “concerns” rating has been constant.

McKinsey was founded 98 years ago; it currently operates in 60 countries and has 4,400 active projects.

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Source: Bloomberg – McKinsey Places 3,000 Staffers on Review as Economies Slow

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3. Initial jobless claims fall

According to the data released by Labor Department, initial jobless claims fell by 9,000 to 218,000 in the week ended on February 3rd, marking the first decrease in 3 weeks.

Bloomberg economists gave a median forecast of 220,000. The new data suggests that the labor market is still robust.

However, large corporations including UPS announced layoff, meaning the hiring demand could slow in the next months.

Continuing claims also fell to 1.87 million, meaning some people had found new jobs.

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Source: Bloomberg – US Initial Jobless Claims Drop for the First Time in Three Weeks

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4. Manhattan rent keeps rising

According to the data released by brokerage Douglas Elliman, median rent in Manhattan increased 1.3% YoY to $4,150 in January and is $100 higher than a month ago.

Last month, over 3,922 new leases were signed, 14% higher than a year ago. Data also shows that inventory in Manhattan reached 7,496 at the end of January. Though 18% higher than a year ago, it is still at a historically low level.

Winter is usually a slow season for rental activities. However, the surprisingly hot market is forcing rent to stay at a high level.

Rent reached the record high of $4,440 last July.

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Source: Bloomberg – Manhattan Apartment Leases Surge, Keeping Rents from Sliding

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5. Ralph Lauren jumps to 9-year high

Today, Ralph Lauren released its third-quarter earnings report. Revenue increased by 6% in the last quarter of 2023, thanks to the market rebound in China.

Ralph Lauren brought in new customers and successfully raised price multiple times, analyst Mary Ross wrote. She expects the company to surpass its 2024 revenue forecast.

CEO Patrice Louvet raised clothing price, cut discount, and focused on selling more expensive items.

Ralph Lauren jumped as much as 13% to its highest price since 2015.

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Source: Bloomberg – Ralph Lauren Hits 9-Year High on Price Increases, China Rebound

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6. US mortgage rate ticks up.

A Chinese VC firm backed by Saudi Arabia’s Public Investment Fund, MSA Capital is raising $1 billion to invest in technology startups in Middle East.

MSA manages over $2.5 billion and will mainly participate in pre-IPO rounds. It could potentially be the largest VC firm that invest in Middle East.

MSA invested in the early rounds of Tabby, a Saudi Arabia buy-now-pay-later startup, which had become one of the first FinTech unicorns.

In 2023, Saudi Arabia startups had raised $1.4 billion, more than its major competitor UAE

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Source: Bloomberg – Saudi-Backed Chinese VC to Raise $1 Billion for Mideast Startups

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7. US mortgage rate ticks up

According to data released by Freddie Mac, the average mortgage rate of a 30-year fixed loan increased to 6.64%, as the Federal Reserve is not rushing to cut rate.

Mortgage rate peak at 7.79% last October and had fallen to about 6.6%, encouraging more buyers to enter the market.

As the Federal Reserve is not cutting rate soon, the value of Treasury will decrease, and the yield will increase. Mortgage rate and Treasury yield have a positive relation.

Limited supply is preventing home price from falling, Housing affordability is still a major concern.

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Source: Bloomberg – US Mortgage Rates Tick Up as Fed Signals Its Fight’s Not Over

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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.